Friday, September 10, 2010

Executive Take: Ted Leonsis

People often wonder what they would do if they were extraordinarily wealthy. What would you buy? What would you do? Where would you go? Some have the dream of owning a professional sports team, but few achieve the level of wealth to make it possible. Washington Redskins owner Dan Snyder proves a lifelong dream doesn’t necessarily lead to success, while Capitals owner Ted Leonsis worked through his rookie mistakes to become the majority owner of the most successful team in the city.

Ted Leonsis was born in Brooklyn, NY and attended college at Georgetown University in D.C.  His marketing company, Redgate Communications Corp., was bought by AOL in 1993 and Leonsis became a senior executive at AOL for the next 13 years.  Among the positions he held at AOL were vice chairman and president.

In 1999, Leonsis had the opportunity to cross something off his “bucket list”: owning a professional sports team.  He bought the Capitals from Abe Pollin, then owner of the Washington Wizards and the MCI Center (now Verizon Center). 

Leonsis’ reign began just after the team’s lone run to the Stanley Cup Finals, and in his first two years as owner the Capitals won back-to-back Southeast Division titles.  Aiming to improve on his team’s consistent playoff woes, he began going to free agency to bring in big name, big money players.  He signed Jaromir Jagr to a 7 year, 77 million dollar contract which at the time was the biggest in NHL history. 

Despite the money he was spending and the high-profile players he was signing, Leonsis still had a team that consistently underperformed come playoff time.  He and General Manager George McPhee decided to change that in 2004, when they instituted a fire sale in order to rebuild the team from the ground up through the draft.  They traded away players who were performing well at that moment for draft picks and prospects that would be good in the future.  They were successful, and the Capitals have won three straight division championships with a young core that has yet to hit its prime.

In 2006, Leonsis resigned from AOL. When Abe Pollin died, Leonsis, who had already bought the WNBA’s Washington Mystics, formed Monumental Sports and Entertainment to acquire the NBA’s Washington Wizards and the Verizon Center.  He also now owns the Baltimore-Washington Ticket Master franchise and serves on the board of American Express, Groupon, Rosetta Stone, and his alma mater, Georgetown University.

Leonsis also has his business hand in filmmaking.  He is the founding chairman of SnagFilms, a website that allows people to share and watch documentaries.  He has also produced award-winning documentaries such as Nanking and Kicking It.  Leonsis’ book The Business of Happiness was also released earlier this year.

What Ted Leonsis is possibly best known for (and most beloved for) is the relationship he nurtures with the fans of his franchises.  He maintains a blog, Ted’s Take, and welcomes anyone and everyone to email him with any questions or suggestions.

Transparency is a main belief of Leonsis’.  He knows the best way to keep consumers coming back for your product is to make them feel involved and be honest with them.  People will never respond well when they think they are being undermined or manipulated.  That is why he told Caps fans up front in 2004 that the team was going to be terrible for a couple of years before it is good for a long time.  So far, he has lived up to that promise.

“I’m sorry” isn’t a phrase that fans often here coming from the mouth of business’s elite, but Leonsis bucks that trend as well.  His honesty and openness endears him to fans not only in D.C., but across the country.  That warmth and generosity is his legacy thus far, and hopefully soon he will have championships to add to his many accomplishments.

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